What did you find intriguing about the Tony Hsieh experiment in Las Vegas and the Downtown Project?

Joining the Downtown Project was a “change the world” opportunity. The pitch was highly enticing and one that many of us couldn’t pass up after being personally recruited by Tony. He offered people the chance to pursue their own personal moonshot as part of a much larger moonshot. It’s human nature to want to be part of something much larger than oneself. Joining DTP felt like being swept up into a nascent presidential campaign, or Facebook in its early days. That’s how Tony pitched it to us, and that’s how it felt in those first few years—there was an international media blitz around the project and its potential to transform how cities are built. Although the project didn’t turn out as we expected it would (in fact, it fell far short!), it was one of those once-in-a-lifetime opportunities that I’m glad I took. The lessons from the experience are still revealing themselves.

What practices did it seem like Zappos was willing to discard to reach for some new paradigm of business management?

Zappos initially made a splash by saying it was doing away with titles, traditional hierarchy, and managers through its adoption of a new decentralized organizational design structure called Holacracy. Implementing those concepts at an Amazon-owned company with 1,500 employees was difficult and led to a mass exodus of talent and drop in employee morale for some time. Under this new structure, all employees were encouraged to operate as entrepreneurs, but it turned out not everyone wanted to do so. People geared toward entrepreneurship are typically working for startups or in a capacity where they have more autonomy and deal with a higher degree of uncertainty on a daily basis; they are less likely to be working inside large corporations. Zappos found that the majority of its employees still wanted more clarity around their paths to career advancement, and generally were happier trading off some agency for security.

Which of the company’s ideals seemed to work in practice and could be implemented by other companies? Which didn’t?

Zappos struggled to adopt the ideologically driven model of Holacracy, and has since moved away from embracing that “off-the-shelf” OS. Holacracy doesn’t tell companies what to do with regard to compensation, hiring/firing, and other core functions, and the company really struggled with developing new ways of handling these operations. From what I understand, these elements are still largely handled in a traditional manner, but the company continues to work toward self-management / organization in other ways. Employee growth & development is a good example: Zappos is now experimenting with a free-marketplace model where employees can pitch the finance department like VCs and grow their careers like entrepreneurs. Those who want to participate can do so; those who would prefer to stay in their lanes can do so too. The concept that people shouldn’t be limited to a single job title and be free to leverage their talents in other ways throughout an organization is progressive and something we’re seeing emerge in other forward-thinking companies. In many ways, Zappos was ahead of the curve and over the next decade we’ll continue see more companies forgo traditional hierarchy for a more fluid hierarchy. DAOs are a great, if extreme, example of how decentralization models can work at scale. In an increasingly complex and globally competitive business environment, the market will demand more flexible and dynamic organizations.

How important is belief for employees when working for a company is led by a charismatic and visionary leader?

There is an inherent paradox that comes with leading a decentralized organization—these companies require a strong visionary leader who can bring enough cohesiveness to a decentralized entity, but one who can transcend their ego enough to allow the organization to self-organize and express its purpose. Belief in the visionary and the purpose are both important when it comes to motivating rank-and-file employees. You also need those who are less emotionally attached to a vision and approach their roles from a more pragmatic standpoint. The healthiest (and most rewarding place) to be is probably somewhere in the middle.

On the flip side, what are the dangers when employees completely buy-in to a corporate vision that seems revolutionary yet is also untested?

The danger of relying too much on charisma and idealism to motivate employees is that cynicism can easily surface when things don’t go as planned—and when you’re trying something new or revolutionary, you have to expect to fail and make mistakes along the way.

What are three takeaways you think business leaders should absorb from the Downtown Project experiment?

1: There’s an adage, “pioneers are the ones with arrows in their backs.” That continues to hold true time and again. Sometimes you are just before your time. 2: To the extent that you can transcend ego and surround yourself with people who are egoless, the more you can manifest a vision because you aren’t standing in the way of it. Because of the failure of the Downtown Project—which we all contributed to, by nature of being a part of it—we were all confronted with this truth. The humility and objectivity gained in the process may have been among the greatest gifts. 3: There was no coincidence that the ventures that sought out and/or received the most support and guidance from their investors were the ones that succeeded. It may seem like common sense, but VCs who provide high-quality advice and resources (access to networks, etc.) to entrepreneurs are the ones who are most likely to receive a ROI. This truism extends to any professional relationship; you often get out what you put in, so long as there is transparency and you cultivate good boundaries.

What is the next book you would like to write?

I’m currently working on a book that explores some of the lessons learned. In stealth mode for the time being.